Norway's Sovereign Wealth Fund Plans to Cut U.S. Treasury Holdings

According to Sina Finance, citing CCTV Finance and CNBC, the world's largest sovereign wealth fund, Norway's sovereign wealth fund, plans to adjust the share of government bonds in its portfolio, including reducing its U.S. Treasury holdings by about $80 billion to diversify risk exposure and improve returns. The Norges Bank Investment Management unit that manages the fund wrote to Norway's Ministry of Finance on September 1, proposing to cut the weight of government bonds in the fund's benchmark bond index from 70% to 50%; the letter was made public on the 4th. The fund currently has less than 26% of its total assets in fixed-income assets. Under the proposed adjustment, its allocation to U.S. Treasuries would fall by 12.2 percentage points to 21.9%, which is estimated to reduce holdings by about $80 billion. The proposal still needs review by the Ministry of Finance and parliament, and a final decision is expected in spring 2027. CNBC said the move comes at a sensitive time for the U.S. Treasury market, as investors worry about the U.S. fiscal outlook and a growing debt burden, while long-dated yields have climbed to a 10-year high. Economists said the planned reduction is not large, but it sends an important signal that the willingness of traditional government bond holders and buyers to absorb supply is declining. The fund manages about $2.34 trillion in assets and invests in about 7,100 companies across more than 50 countries and regions. Data showed that its investment return in the first half of this year reached 1.75 trillion Norwegian kroner, a record high.